Consumer Attitudes to Borrowing Online

• Using global data from our FSCI survey this report analyzes how consumer attitudes towards borrowing online are changing.
• The report analyzes the causes of these shifts and identifies strategies that can be employed by lenders to attract & retain online customers.
• The report discusses the opportunities and threats faced by lenders wanting to develop their online strategy.
• A number of key trends have been identified that describe the impact of new technologies upon the market for loans.

• Access the results of Datamonitor's Global FS Consumer Insight survey, enabling you to understand shifting online attitudes and behaviors.
• Identify why these changes are occurring, and understand the future implications for online borrowing.
• Identify actionable strategies that can help encourage consumers to engage with the online channel.

Overview

Catalyst

Summary

Methodology

Table of Contents

Table of figures

Table of tables

Introduction

Financial Services Consumer Insight: dispelling the myths surrounding online behaviors

Understanding consumers' attitudes towards financial services is vital for providers

The Future Decoded

Trend: Online activity continues to grow across the world

The majority of online consumers have bought financial products and services online

Older consumers are almost as likely to buy financial services online as younger consumers

Insight: The online channel is increasingly important for borrowing-related activity

There is significant regional variation in the propensity of consumers to borrow online

Consumers' take-up of online borrowing facilities varies across countries

Older searchers of online deals are more likely to convert to borrowers than younger searchers

The wealthier consumers are, the more inclined they are to search for loan deals online

The more financially knowledgeable consumers are, the more likely they are to search out deals

Insight: Consumers exhibit caution when searching and applying for loans online

Consumers prefer to apply for loans direct from a provider rather than through an aggregator site

Consumers do not buy exclusively on the basis of price

Price-focused consumers are much more likely to apply for loan deals online

Insight: Consumers still desire human contact when searching and applying for loans

Consumers cite a preference for dealing with people as a key reason for not buying online

Financial intelligence and use of financial advice in borrowing

Trend: Security remains a significant barrier to the further adoption of online banking

Criminal activity directed at online consumers is on the rise

Commonwealth Bank in Australia was subjected to three separate phishing attacks in just one week

NatWest has introduced measures to combat the threat of phishing

Insight: Many consumers harbor doubts about the safety of borrowing online

Perceptions of safety are closely linked to previous experience of online searches and applications

Confidence in security directly impacts upon propensity to borrow online

Insight: Rising dependence on online channels increases vulnerability to attacks

Social networking sites were compromised by hackers targeting a specific blogger

Three individuals have been charged with stealing 130 million credit card numbers in the US

Trend: Web 2.0 presents new opportunities for banks to engage with their borrowing customers

Social networking is here to stay

Social media have been adopted by all sections of the population

Insight: Banks can exploit new media to increase customer engagement

Providers need to carefully consider how to make use of new media

Wells Fargo transforms the internet from a liability into an asset for itself

Wells Fargo was the first bank to enter the world of blogging

YouTube provided another opportunity for Wells Fargo to engage with its customers

CompareTheMarket.com has scored a hit with its current 'meerkat' campaign

The Compare the Meerkat campaign encompasses, Facebook, YouTube and Twitter

The campaign has succeeded in boosting traffic to the CompareTheMarket.com website

Other aggregators have been forced to respond to the success of the 'meerkat' campaign

Insight: Providers should avoid using social media for traditional sales and marketing approaches

Social media can help create a more conducive environment for building business

Social media is a valuable tool for providers, but there can be pitfalls

UBank makes a rare slip-up

The furniture store Habitat was lambasted for exploiting the Iran crisis to promote itself on Twitter

Insight: New technology enables banks to target their loan offerings more efficiently

BBVA has launched an innovative online service that identifies the needs of individual customers

Applications such as Tú Cuentas increase the possibilities for the cross-selling of loan products

Several banks now boast the capacity to instantly communicate online with prospective loan applicants

Web chat presents fraudsters with new opportunities

Action Points

Action point: Take advantage of Web 2.0 and social media to enhance customer engagement

Banks should move beyond basic sales pitches focused primarily on rate

Use new channels as a proxy for face-to-face contact

Exploit new technology to create a richer customer experience

Action point: Target loan products at older consumers

Video and social media can be used to reach this market

Action point: Take steps to improve online security, and perceptions of security

Banks need to tighten up their security protocols to reassure customers

Mobile technology can be incorporated into authentication procedures

Greater efforts to educate and reassure the public are needed

APPENDIX

Supplementary data

Definitions

Asia Pacific

BRIC

Europe

Phishing attack

Methodology

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Global internet usage, over time

Table 2: Internet users per 100 inhabitants, by geographical area, over time

Table 3: Purchase of financial products online, by country

Table 4: Current usage of personal loans, by country

Table 5: Online loan behavior and current loan usage, by country

Table 6: Online loan behavior, by age

Table 7: Online loan behavior, by household income (US)

Table 8: Online loan behavior, by household income (UK)

Table 9: Online loan behavior, by household income (Australia)

Table 10: Online loan behavior, by level of financial knowledge

Table 11: Direct vs. comparison site sales of online loans, by country

Table 12: Attitudes to price, by whether or not have bought financial products online, by country

Table 13: Attitudes to price, by age

Table 14: Effect of importance of price on driving online loan application

Table 15: Reasons for not banking online

Table 16: Propensity to search, but not apply, for loans online, by country

Table 17: Propensity to discuss borrowing needs in person, by country

Table 18: Attitudes to safety of borrowing online, by country

Table 19: Attitudes to safety of borrowing online, by online loan behavior

Table 20: Online loan behavior, by level of concern about safety of online borrowing

Table 21: Conversion rates for online loan searchers, by age

List of Figures

Figure 1: Internet use has expanded rapidly since the mid-1990s

Figure 2: Internet penetration in the BRIC markets lags behind the rest of the world

Figure 3: In nearly all markets, most online consumers have purchased financial products online

Figure 4: Personal loans are more common in Europe than in Asia

Figure 5: Russian consumers are happy to search for loan deals online, but do not apply often

Figure 6: Younger age groups are much more likely to search for loans online

Figure 7: There is a correlation between household income and propensity to search for deals online

Figure 8: Consumers who are financially literate are more inclined to search for deals

Figure 9: Buying loans direct from provider is more popular than buying through an aggregator site

Figure 10: Those who have bought online are more concerned about price than those who have not

Figure 11: Older consumers are least likely to be focused solely on price

Figure 12: Desire for a good price is a key driver of online application

Figure 13: Preference for face-to-face contact remains a key reason for not migrating to online banking

Figure 14: A sizeable proportion of consumers are reluctant to ever apply for loans online

Figure 15: In nearly all markets, there is a desire to deal with providers in person regarding loans

Figure 16: Concern over online security is the main reason driving non-usage of online banking

Figure 17: Skepticism over safety of online loan application is higher among non-online users

Figure 18: Consumers with no prior experience of applying for loans online feel less confident

Figure 19: Impact of security concerns on online usage

Figure 20: Wells Fargo has embraced social media, including Twitter, YouTube and blogs

Figure 21: CompareTheMarket.com's new campaign is a well-integrated multi-channel initiative

Figure 22: Popularity of the CompareTheMarket.com site shot up in the wake of the marketing campaign

Figure 23: Tú Cuentas from BBVA allows customers to analyze their financial situation in a range of ways

Figure 24: Barclays Bank invites consumers interested in its loans to chat online

Figure 25: RBC and NatWest have made efforts to position themselves as friends of the customer

Figure 26: Conversion rates increase in line with age of consumer

Figure 27: Several providers already cater for older consumers

Figure 28: Waitrose has used online video streaming technology to reach out to consumers

Figure 29: ING Direct provides comprehensive information on verifying the validity of its website